Volume 15, Number 2 · April 2005

Hard Auto Insurance Decisions

by Roger J. Ecker

Trying to understand the automobile insurance laws created by the Pennsylvania Legislature is somewhat like Alice's comments in Lewis Carroll's Through the Looking Glass: "The question is," said Alice, "whether you can make words mean so many different things."

Some recent inquiries by clients highlight the considerable confusion people still experience with auto insurance. "Tort options," "uninsured" and "underinsured" coverages - they all have substantial consequences when you make your elections.

To help you understand what the many words mean that were enacted into law in the "Pennsylvania Motor Vehicle Financial Responsibility Law," from our experience, we have suggested some guidelines ... DO'S AND DON'TS, if you will. We hope these will help you make better decisions to protect your families and businesses.

Rule No. 1: DO NOT elect the "limited tort option." DO NOT be misled by the small premium savings; rather, elect and continue to keep in force and effect each year the "full tort coverage."

Rule No. 2: DO NOT reject uninsured motorist coverage (UM) or underinsured motorist coverage (UIM).

Rule No. 3: DO NOT sign a waiver form to accept UM or UIM benefits that are less than your liability coverage under your automobile protection.

Rule No. 4: DO NOT reject "stacking" of policies.

Rule No. 5: DO consider increasing your liability and UM and UIM coverage to at least $300,000, and possibly higher.

Rule No. 6: DO consider electing a higher deductible for your comprehensive/collision coverage, if you want to try to save a few dollars on your insurance premiums.

Rule No. 7: DO be sure to coordinate your auto insurance with benefits you receive from your employment, such as health insurance coverage and disability benefits. Maintain sufficient wage loss and medical coverage on your auto policy if coverage is not adequate through your employer.

Rule No. 8: DO shop around and obtain competitive quotes from several reputable insurance carriers when your policy is due for renewal.

Rule No. 9: DO NOT allow insurance coverage to lapse for a registered vehicle which you may own, even if you intend to garage it for a period of time. If you do, you may lose all of your first-party insurance benefits, even if you drive only an insured vehicle.

At Peacock Keller, we represent both insured persons and insurance carriers, and we also act as neutral arbitrators in UIM and UM arbitration hearings. We have seen grievous injuries, such as serious and permanent impairment of bodily function, go uncompensated or undercompensated because a policyholder elected low UM/UIM coverage in order to save a few dollars on premium costs. UM/UIM coverage is some of the least expensive you can buy, and the premium savings are usually not worth the risk assumed.

Recent estimates are that more than one in ten autos in Pennsylvania is uninsured. As you may conclude, the type of person who is irresponsible enough to forego automobile liability insurance on his automobile is often the type of person who has poor driving habits and causes accidents. So Uninsured and Underinsured coverage is important!

Another crucial choice is whether to elect full or limited tort coverage. By electing the "full tort" option on your insurance policy, you and your family will be afforded an unrestricted right to sue for financial compensation for injuries caused by other drivers. In addition to recovering all medical and other out-of-pocket expenses, you may also sue for and recover financial compensation for pain, suffering and non-monetary damages, such as inconvenience and loss of the pleasures of life.

On the other hand, by electing the "limited tort" option, you and your family may recover only medical and other out-of-pocket economic losses, but not for pain, suffering, inconvenience and the loss of the pleasures of life. The exception is, if the injury sustained is a "serious injury." The law defines such injury as one resulting in "death or serious impairment of a body function or serious permanent disfigurement."

You must ask yourself, "Do I want to take the risk, for myself and my family, of allowing a judge or jury to decide whether my injury rises to the statutory definition of serious injury?" Be advised that court holdings as to what is a "serious injury" are not consistent.

Automobile insurance coverage represents an important investment in financial security. For any further questions and help in making choices in insurance coverage, or any aspect of personal injury cases, feel free to call Roger Ecker or Doug Nolin in Peacock Keller's litigation department.

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